Budget 2014: The Chancellor's mind is on politics as well as economics

But I would be surprised if the Budget alone greatly changes the electoral mood

Share

It is a familiar cliché to describe George Osborne as highly political, but every Chancellor considers the politics as well as the economics. Combining the two is the artistry required of the second most difficult job in government. The more relevant question is how good a political and economic artist is this particular Chancellor?

Not surprisingly every word Mr Osborne delivered was with the next election in mind. Polling day is only a year or so away. The new pensioner bond, paying interest rates of up to 4 per cent, will be available from January, the start of the election year. Of course this is no coincidence. Timing apart, the policy is also a substantial reform. While affluent savers might be helped, some on welfare are being hit.

Mr Osborne’s welfare cap is popular and framed partly to present Labour with a trap. Already those close to the Chancellor are asking how Labour will pay for its proposed scrapping of the bedroom tax if it supports the overall cap. Mr Osborne has also set laid another, wider trap. He will legislate mischievously later this year for his very tough spending targets planned for the next parliament. Will Labour support them? This is a very big dilemma for the Labour leadership and one that it has yet to resolve. If Messrs Miliband and Balls back Mr Osborne they will have absolutely no wriggle room if they were to win, even to provide extra cash for the NHS. If they oppose the plans they know they risk falling into the old “tax and spend” traps that Mr Osborne hopes to play.

But there are some very big questions that arise from the Budget relating to spending. It is easy for a Chancellor to set overall spending targets and much harder to specify where the cuts will fall. The NHS is a good example. Where will the axe land in the next parliament if the NHS is compelled to implement real terms cuts of around 10 per cent? In relation to welfare, Mr Osborne sets a cap that can be revised only with parliamentary approval. The level of transparency, accountability and scrutiny are worthwhile innovations. Yet we have no details how he plans to meet the additional billions of cuts in welfare that he outlined in general terms at the beginning of the year to the dismay of the Welfare Secretary, Iain Duncan Smith. Even Mr Osborne’s pensions’ reforms announced today do little to address the most-fundamental challenge facing the next government: How to meet the costly demands of a growing elderly population that is living longer? Overall spending cuts are popular, specific ones often are not.  Mr Osborne proposes another parliament of so far vaguely defined real terms cuts.

 

Fiscally neutral budgets tend to be quickly forgotten or remembered for the wrong reasons as far as Chancellors are concerned. With no spare cash, Chancellors still feel the need to make waves that subsequently almost sweep them away. I detect no new waves threatening to swamp Mr Osborne in his latest more or less fiscally neutral budget. Nor will this one be forgotten. The proposed pension changes and other reforms for savers are as radical as some of the policies unveiled by the Coalition in its recklessly revolutionary opening few months. But I would be surprised if the Budget alone greatly changes the electoral mood. There is a deep ambiguity to the figures unveiled in the budget. Growth is higher than forecast a year ago, but not as high as was predicted at the start of the parliament. The deficit is falling but will not be wiped out in this parliament, as was originally planned. Mr Osborne attempts an extremely delicate balancing act of seeking vindication while arguing there is a long way to go. As he puts it, the job is not yet done. The highly political Chancellor tends to unveil Budgets that do not greatly change the political mood.

READ MORE:
BUDGET 2014: AT A GLANCE
PENSIONS AND SAVINGS: OSBORNE UNVEILS RADICAL REFORM
NATALIE BENNETT: THIS IS WHAT A TRULY PROGRESSIVE BUDGET WOULD LOOK LIKE
SEAN O'GRADY: THE CHANGES TO PENSIONS ARE REVOLUTIONARY
TOP BUDGET COMMENT FROM AROUND THE WEB

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
iJobs Job Widget
iJobs General

Recruitment Genius: Trainee Health & Safety Consultant

£16000 - £20000 per annum: Recruitment Genius: A fantastic and exciting opport...

Recruitment Genius: Project and Quality Manager

£28000 - £32000 per annum: Recruitment Genius: This company is an independent ...

Recruitment Genius: Trainee Sales Executive - OTE £20,625

£14625 - £20625 per annum: Recruitment Genius: This role is for an enthusiasti...

Guru Careers: Financial Controller

£45 - £55k DOE: Guru Careers: A Financial Controller is required to join a suc...

Day In a Page

Read Next
Nicky Clarke has criticised the Duchess of Cambridge for having grey hair  

Letting one’s hair turn grey would be the most subversive Royal act

Rosie Millard
 

London’s foreign money bubble is bursting – but will we be better off?

Chris Blackhurst
Mullah Omar, creator of the Taliban, is dead... for the fourth time

Mullah Omar, creator of the Taliban, is dead... for the fourth time

I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

Margaret Attwood on climate change

The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

New Dr Seuss manuscript discovered

What Pet Should I Get? goes on sale this week
Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

The cartoon hedgehog leading the way into a whole new reality

Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
Ants have unique ability to switch between individual and collective action, says study

Secrets of ants' teamwork revealed

The insects have an almost unique ability to switch between individual and collective action
Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

Donovan marks his 50th year in folk

The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

Twitter accused of 'Facebookisation'

Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

Jane Birkin asks Hermès to rename bag

The star was shocked by a Peta investigation into the exotic skins trade
10 best waterproof mascaras

Whatever the weather: 10 best waterproof mascaras

We found lash-enhancing beauties that won’t budge no matter what you throw at them
Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

Diego Costa: I go to war. You come with me...

Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
Ashes 2015: England show the mettle to strike back hard in third Test

England show the mettle to strike back hard in third Test

The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

Charley Hull: 'I know I'm a good golfer but I'm also just a person'

British teen keeps her feet on ground ahead of Women's Open
Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'
Singapore's domestic workers routinely exploited and often abused in the service of rich nationals

Singapore's hidden secret of domestic worker abuse

David Cameron was shown the country's shiniest veneer on his tour. What he didn't see was the army of foreign women who are routinely exploited and often abused in the service of rich nationals